What Will 2013 Do To Aussie Games Retail?

Australia's not exactly blessed with lots of competing video game retail chains. What's the story likely to be in 2013, and does physical retail matter any more in any case?

The business of selling video games in Australia has been a constantly shifting and evolving one. I can well remember in my youth the smaller computer stores being the best place to buy games, alongside larger retail outlets such as K-Mart or Retravision; indeed, my local K-Mart used to load up C64 games and leave them running as a primitive way to advertise games… or attract lots of spotty kids who would only reluctantly step away from the counter the C64 was lodged behind. Yeah, I'm that old.

Video games retail has certainly become a lot more sophisticated than that in recent times, but the simple truth is this; there aren't anywhere near as many places to physically buy games in Australia as there used to be, and it doesn't really appear that this is a trend that's likely to reverse in 2013.

The Established Players

The local scene is dominated in pure terms by EB Games, but, at least on an anecdotal basis, the last dozen or so stores I've been in have been solidly dominated by second-hand sales rather than strong competition in pricing new titles. Nothing wrong with second-hand per se in terms of EB Games' bottom line, but it's not something that can perpetuate without a source of new titles, and it's not something that actively drives new games prices down; typically a second-hand title on EB Games' shelves is only a matter of dollars cheaper than a new copy!

EB Games' closest competitor is easily JB Hi-Fi, another store where second-hand has rapidly become a solid part of the business, albeit (at least on the surface) not to quite the same extent as it is with EB Games. JB isn't particularly dependant on just games sales the way that EB Games is, but that's arguably a strength for games consumers, as it'll often aggressively cut prices on new titles as a loss leader to get customers into its stores, bolstered by profits elsewhere in its stores.

Read JB Hi-Fi's 2012 report, though, and it's a bit gloomier; games doesn't get much of a look in when considering growth factors, with JB Hi-Fi seeing more growth in the computer category — and specifically tablets — driving its sales in the future. Games gets exactly one mention, and that's purely as a mention that JB Hi-Fi happens to sell them.

GameTraders continues to be a presence, and the only other multi-state games store chain (feel free to correct me here if I'm wrong) we've got. It's an interesting case; while it's a smaller chain, it's also willing to "break the rules" via aggressive direct importing, something that the other chains have only really dabbled in. I'm personally a bit sad that the retro sections that used to make GameTraders stores rather distinctive have been all but phased out — you can't even order retro titles from GameTraders web site any more — but that's just my personal retro bias at play.

Beyond those three, you've got the larger retail chains — K-Mart, Big W, Dick Smith, Harvey Norman and so on — but aside from the odd loss-leading special, they're in no way specialist games retailers; indeed, it's a common complaint here on Kotaku that it's almost impossible to find some games within the mass retail space. I don't expect that to change much in 2013; indeed, K-Mart's seen a lot of success in a retail sense by switching to its own house brands for just about everything. Short of launching the K-Mart 360 (unlikely), it can't do that with games, but it wouldn't surprise me to see games further marginalised in mass retail as 2013 rolls out.

What About A Pure Second-hand Play?

One thing I hadn't realised quite literally until yesterday was that UK second-hand games chain CEX had launched in Australia; there's now 11 stores across NSW and the ACT, and they seem to be expanding rapidly. From the look of the store I saw and the web site, it appears they're targeting old GAME store locations, although I suppose that depends on commercial availability of the retail space.

I've personally got fond memories of CEX right back to its original London store; the store near Warren St Tube station transformed itself into one of the nicest retro games stores I've ever been in (for a while), and from what I could (anecdotally) see yesterday, locally CEX is certainly pricing its second-hand stock quite aggressively for most platforms. That's good news for those wanting another trade-in option for their played out physical games, but CEX simply doesn't exist without existing games sales. With Sony reportedly working on making PS4 games impossible (or at least, illogical) to trade in, though, CEX's exact model may well shift rapidly away from games and into more profitable areas such as mobile phones and Blu-Ray discs.

With Digital And Online, Does It Really Matter?

The elephant in the room here is that all these stores have physical presence, and for a lot of games retail, it's perhaps not a vital component. Pretty much any time an article runs here at Kotaku talking up a local sale, it'll be checked quickly against the online importers. That makes sense from an immediate financial point of view; if an overseas store will sell you GTA V cheaper than the "sale" price here, why wouldn't you buy it that way? At the same time, though, many of those stores operate on the margin between the local retail price and whatever they pay in their territory; with less local competition they could well see an opportunity to raise their prices and profits while still seeming "cheap".

Then there's the totally digital plays of services like Steam, PSN, Nintendo's eShop and XBLA. I've got plenty of titles across all four, but with the exception of Steam, there's not exactly "competition" in these spaces to drive down prices; they are whatever Sony, Nintendo or Microsoft decide they're going to be. 2012 didn't exactly see digital-only copies of games even pretend to keep pace with the price of full copies. Is that the future that we want to see for games retail locally, especially as there's obviously no way to generate a second-hand sale for digital goods like these?

Steam's the exception there, with a fairly healthy, if somewhat predictable price reduction structure, driven at least in part because it's not as though Steam is the only way to get PC games. It's nice to bag a bargain, and my Steam pile of shame is indeed pretty shameful, but at the same time there have been far too many instances of Australian Steam game pricing being way behind that of the rest of the world. Invest too heavily here, and that could be the future we're looking towards. Interestingly, JB Hi-Fi's 2012 annual report talks about the success of its NOW music platform, with a note that "JB Hi=Fi's ongoing evolution of the NOW platform will include expanding into new digital markets". It's a long shot, but there's always the possibility of a more localised digital game distribution front launching in 2013.

What do you reckon? How do you buy your games now, and does the fate of Australian games retail concern you in any real way?


Comments

    I managed 3 Eb stores and trust me, the horror stories are all very true. You're pushed by area managers to milk customers for every drop of money. I honestly couldn't do it without feeling like a complete pratt.

      Isn't the same true for the majority of retail outlets though? Practically all area managers do that, and are very hard to please. "you sold memberships to 3/4 of the customers that came today but don't pat yourself on the back because that's not 100%!".

    K-Mart sold computers? That kind of rings a bell. I vaguely recall jumping onto computers in shops and typing in:

    10 PRINT="HELLO WORLD"
    20 GOTO 10

    Also, Lego tables.

    (Sorry Alex - I did read the article, but your nostalgia trip was too contagious)

      You forgot the semi-colon at the end in order to make it flow across the screen ;)

    Gabe Newell looks at the concept of 'competition' and merely chortles.

    Last edited 04/01/13 4:53 pm

    Marion GameTraders in SA still has a fairly strong retro deal going often getting hold of some of the more difficult retro games (Legend of Dragoon, various SNES games, etc). As well as more unique things like weapon replicas and other tempting merchandise. The owner of that store knows what to hunt down and get hold of. It's very difficult to walk out of that particular store without seeing something to make my wallet lighter.

    My local EB had taken over the store of the GAME that used to be near it and turned it into EB Extra which houses most of their non-game merchandise (shirts and stuff). Shin Tokyo is in the city and they have a lot of stuff you can occasionally find in GTs but it's in the middle of the city so not the most convenient of places. Money I might save from buying there I'd waste in getting there. I prefer to buy my games from places other than JB where possible, the Australian game retail industry cant afford to lose the likes of EB and GT or JB will take over and then start jumping the price from lack of competition.

      The Marion store is pretty good for retro stuff... although I do recall going in there and seeing a boxed Secret Of Mana for something like $300. Perhaps that's why it was still there.

    In the last couple of years we've lost GAME,WOW sight and sound and my local indi game shop that was in bussiness for 15 years.
    Add to this Dick Smith is slowly closing shops as leases run out and will be all gone in a year or so,Blockbuster and Game-Traders are closing store by store and at least in Adelaide Myer and David Jones no longer stock games.
    In a year or two all that will be left are EB and JB.Places like Target and Big W can't be relied upon for day 1 releases.
    EB are overpriced and JB isn't as cheap as they used to be, gone are the 3for1 trade-ins, there prices had seen to have gone up alongside the collapse of GAME but have gone down more recently to the point where $69 for a new release beats imprting from Ozgamer etc IMO.

    It's a tough one. I think they'll definitely be in struggle town for 2013.

    I don't buy physical copies of games any more. My PC hasn't had a optical drive in it for over two years now.

    Indie games are where it's at. Most of the AAA titles I ignore until such time as I can pick them up < $20.

    Last edited 04/01/13 10:28 pm

      heh when I upgraded my pc my non-sata dvd drive had nowhere to plug in on the new motherboard so it just sat in the bay unplugged because I didn't have a spare cover. Recently I replaced it with a blu ray drive so I can use discs but haven't really had to use it, everything is digital now.

        My reason for not having an optical drive any more is a little bit painful.

        I dropped my PC when I was moving house. The front cover came off while I was loading it into the car leaving only one hand on the case. Being a 20kg+ PC (heavy case) I had no chance and the first impact point was the BD drive.

        Bits went everywhere and being late in the evening I just collected what I could. Got to the new house and started putting it back together. The video card had come out of the PCI-E slot (broke off the stabiliser at the end of the slot) and the CPU cooler was bent at a 90 degree angle from the heatpipes just above the CPU itself (and the fans had fallen off).

        I put the graphics card back in, bent the cooler back into an upright position and put the fans back on. Checked that nothing else was broken and did a once over on the mainboard for any cracks in the PCB and broken/leaking capacitors.

        Turned it upside down to make sure nothing else was loose and to collect all the rattling pieces to see if anything major was there. Fortunately it was all just plastic pieces from the case itself.

        Tried to turn it on but it wouldn't. Took the side panel off so I could have a look at the power button. It was broken (wires were intact) so that when pushed it wasn't touching the actual button sitting behind the rather fancy looking one (now it really was for show). I ran the cable outside the case and then pushed the button.

        It did turn on (amazingly) and it posted successfully. The PC booted up just fine. In the end the only fatality was the BD drive. That was nearly 2 and a half years ago. I'm still using that PC and haven't changed anything.

        One thing's for sure when I replace it in the next month or two. I'm not getting a Thermaltake case. I will definitely be getting another Noctua CPU cooler and ASUS mainboard. If they can survive a fall like that they can survive anything!

    My local Gametraders has a massive Retro section. Massive. 2/3's of the store is retro. I would rather pay extra and buy from them.

    What I think is important to note is that there will always be a retailer at the top ripping everyone off.

    The basic case of 'Better the Devil You Know', and the clear fact that there are alternatives to what EB offers shows that it can't be hurting that much. What we should be looking at is how this retailer going to survive with thier main source of income and profit being through preowneds games.

    While they may not be everyone's favourite, especially not mine, working at the competition, EB Gmaes is still a residual beacon for the gaming industry is Australia. It is hard to see games where they are at now without them. And it would be a shame to lose them!!

    Because our entire dumb-assed government's fiscal policy pretty much revolves around:
    -Item X is selling really well (usually due to a lower price thanks to our fucked economy)
    One of two things then happens:
    -Rich prick CEO's of competing companies complain to their rich politician friends about how item X sales are breaking their balls and how fucking unfair it is.
    -Government takes notice of all the money being made and decides it wants in.
    Subsequently:
    -Government taxes item X until price is roughly equal to competing items (if the market is a fluctuating one, it will often become MORE expensive than equivalent items due to the rock-solid tax hanging around its neck. Remember when diesel was cheap?)
    -Sales plummet, Government shrugs and looks elsewhere for more free money.

    As long as retailers (and distributors, etc) keep ripping off Aussie buyers, I'll keep buying from the US Steam store. I hate Steam, but I hate being ripped off more.

    Last edited 06/01/13 1:33 pm

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